Correlation Between Cerberus Cyber and Nextnav Acquisition

Can any of the company-specific risk be diversified away by investing in both Cerberus Cyber and Nextnav Acquisition at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cerberus Cyber and Nextnav Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cerberus Cyber Sentinel and Nextnav Acquisition Corp, you can compare the effects of market volatilities on Cerberus Cyber and Nextnav Acquisition and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cerberus Cyber with a short position of Nextnav Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cerberus Cyber and Nextnav Acquisition.

Diversification Opportunities for Cerberus Cyber and Nextnav Acquisition

0.51

Correlation Coefficient

Cerberus Cyber  Nextnav Acquisition

Very weak diversification

The 3 months correlation between Cerberus and Nextnav is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cerberus Cyber Sentinel and Nextnav Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextnav Acquisition Corp and Cerberus Cyber is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cerberus Cyber Sentinel are associated (or correlated) with Nextnav Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextnav Acquisition Corp has no effect on the direction of Cerberus Cyber i.e., Cerberus Cyber and Nextnav Acquisition go up and down completely randomly.

Pair Corralation between Cerberus Cyber and Nextnav Acquisition

Given the investment horizon of 90 days Cerberus Cyber Sentinel is expected to under-perform the Nextnav Acquisition. In addition to that, Cerberus Cyber is 2.65 times more volatile than Nextnav Acquisition Corp. It trades about -0.07 of its total potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about -0.13 per unit of volatility. If you would invest  1,560  in Nextnav Acquisition Corp on October 21, 2024 and sell it today you would lose (261.00) from holding Nextnav Acquisition Corp or give up 16.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cerberus Cyber Sentinel  vs.  Nextnav Acquisition Corp

Cerberus Cyber Sentinel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cerberus Cyber Sentinel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Cerberus Cyber displayed solid returns over the last few months and may actually be approaching a breakup point.

Nextnav Acquisition Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nextnav Acquisition Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Nextnav Acquisition displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cerberus Cyber and Nextnav Acquisition

The main advantage of trading using opposite Cerberus Cyber and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerberus Cyber position performs unexpectedly, Nextnav Acquisition can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nextnav Acquisition will offset losses from the drop in Nextnav Acquisition's long position.

The idea behind Cerberus Cyber Sentinel and Nextnav Acquisition Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.